MORRISONS appeased investors yesterday by hiking its dividend payout by five per cent despite the troubled supermarket group reporting a plunge in first-half profits.
Underlying pre-tax profits fell by 51 per cent to £181m in the six months to 3 August – its lowest in eight years – after Morrisons slashed the price of thousands of items to compete against the discounters.
Total turnover was down 4.9 per cent to £8.5bn, while like-for-like sales excluding fuel and VAT tumbled 7.4 per cent, having fallen 7.1 per cent in the first quarter.
Bernstein analyst Bruno Monteyne described the grocer’s results as “diabolical”, arguing that figures showing that items per shoppers’ basket were increasing was “misleading” because Morrisons was effectively giving away food for free.
But chief executive Dalton Philips insisted that while sales had yet to improve, the business is “getting back on the front foot” as it focused on price, convenience and fresh food.
“This is only a start but we are sure the signs of change are beginning to resonate with customers and change shopping behaviour,” he said.
The grocer still expects to meet its full-year target of underlying pre-tax profits to be in the range £325m-£375m. Shares nevertheless edged higher yesterday, as the group said it was still paying an interim dividend of 4.03p a share and confirmed it was to commitment to pay a full-year dividend of at least 13.65p.